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The header image, showing a blue background and a portrait of Ole Wiesinger
echo-interview, June 2018

Undermining pension entitlements would lead to social unrest

ELIPSLIFE ECHO - INTERVIEWS WITH PROMINENT BUSINESS LEADERS

echo-interview with Ole Wiesinger

echo-interview with Ole Wiesinger, CEO of the Hirslanden Privat Clinic Group

elipsLife echo: Mr Wiesinger, despite assurances to the contrary, costs continue to soar in the healthcare sector. Are the hospitals and, by association, Hirslanden contributing to the cost rise?
Ole Wiesinger: If you compare GNP growth with the rise in healthcare costs, then the development in the latter sector is still manageable. But healthcare is nevertheless becoming increasingly expensive. This is attributable to our ageing society and technical progress. Over the coming years, indeed decades, costs will continue to creep up. However, we still have to make efforts to curb this development. But this isn’t going to be an easy road to go down since the health insurance compa-nies, cantons, doctors and hospitals all have differing interests.

What’s Hirslanden doing to drive down costs?
Driving down costs entails working as efficiently as possible. Our primary goal is to generate benefit for the patient. The equation “patient benefit = quality of medical treatment plus patient satisfaction, divided by the costs“ is a neat way of describing our aim. The Hirslanden Group is efficient, lean and organised along commercially sensible lines. This has involved a systematic restructuring of the company to create a group that we can run in an as standardised and centralised as possible way. This approach enables us to contribute towards driving down costs and benefiting patients.

How many clinics and practice centres does Hirslanden operate and in which cantons?
Currently, we operate 17 hospitals, 16 radiology centres and four practices in the Schaffhausen, Luzern, Bern and Düdingen train staions, as well as four radiotherapy centres. With the exception of Tessin and Basel city, we’re represented in all urban centres in Switzerland. Right now, 16 of our 17 hospitals are on the hospital lists of 11 siting cantons.

When it comes to the cantonal hospitals, do the cantons regard Hirslanden as a partner or competitor?
Unfortunately not as a partner! On the contrary, there’s an obvious competitve relationship in volved. We’re playing a game of football where the referee is on the side of our opponents. The multilayered role of the cantons in the healthcare sector presents us with a major challenge because Switzerland’s cantons are the biggest hospital operators. It’s often claimed that the hospitals are independent joint stock companies not subject to canton influence. This is not the case. The cantons run the hospitals and, at the same time, are the authorities that set the rules. The fact is that the cantons have their fingers in too many pies, a situation which is bound to cause problems. There are only two solutions here: Either they shed their political responsibility, which really isn’t an option given the need for government oversight of healthcare provision. Or the cantons relin-quish their function as hospital operators. The latter option would be the logical way to go.

A picture of Ole Wiesinger giving the interview.

Many public hospitals find themselves in economic difficulties, but not the Hirslanden group. What’s the reason?
There are two main explanations for our sound performance: As a large company with total sales of almost CHF 1.8 bn, we operate more efficiently than standalone outfits because our group structure enables us to act more quickly and, in most cases, in a more agile way. Secondly, we still have a larger proportion of patients with supplementary insurance cover in our hospitals and clinics. And these people tend to have higher-than-average spending power.

Hirslanden operates under the so-called attending physician system. How do you manage to attract the top surgeons into your operating theatres?
With the attending physician system, it’s our goal to become a leading healthcare provider. We’re moving ever closer to achieving that goal, which is a reason why we’re becoming increasingly attractive for doctors. Hirslanden intends to compete on a par with the major canton hospitals and university clinics. So it’s vital we maintain the highest clinical standards. Our attending physician system offers highly qualified, specialised doctors with their own surgeries the possibility to practice advanced medicine – without bothersome hierarchies.

Hirslanden employs almost 10,000 people. Is old-age provisioning a topic during recruitment interviews?
Yes and no. The younger the candidate, the less he or she is interested in this topic. A 20-year-old hospital nurse doesn’t think about making provisions for old age. The hospital market is competitive and relatively transparent in respect to salary structures and other benefits. Medical professionals compare the private sector with the public hospitals in terms of the salaries and benefits they each offer. Because Hirslanden wants to be efficient, it can’t offer salaries that are well over the benchmark. So additional incentives are important in attracting talent. Our pension fund is a case in point. It’s on a sound financial footing and structured to take account of modern requirements. The Hirslanden pension fund provides a solid benefit that creates trust.

Old-age provisioning is the main thing people worry about, but the last 20 years have seen no reform of the system. Now the Federal Council wants to prioritise the restructuring of the first pillar and finance this by raising value-added tax. Is this a good plan?
Here’s an alternative idea: If you look at the surplus generated by the Swiss Confederation last year, you could ask yourself ,“why not allocate a substantial portion of this to the AHV?“ Payment into the AHV fund wouldn’t admittedly solve any structural problems, but it would at least help stabilise the financial situation. Achieving the same goal by raising value-added tax for consumers is no doubt possible as well. However, as things are at the moment, I would prefer to see a payment made from the profit generated by the Confederation.

A picture of Ole Wiesinger giving the interview.

Where do you stand on raising the retirement age for women to 65?
The generation following ours will probably have to work until 75 anyway. So a retirement age of 65 for women is probably irrelevant.

Isn’t there a danger that the current low interest rates coupled with demographic develop-ment could unhinge the second pillar and mean that we fall victim to benefits promises that just can’t be finananced?
The risk is there. But let me take our pension fund as an example: We’ve continuously adapted the technical framework of the fund in line with actual developments. This way, we’ve been able to maintain the system’s viability. Claiming we’re all going to be victims of circumstances sounds overly dramatic to me. In my view, the pension funds will be able to deliver on most of their benefits promises provided they make the right decisions in a timely fashion and are willing to explain to employees why these decisions are necessary.

Should pensioners also be asked to contribute towards the financial restructuring of the sec-ond pillar, or are already secured pension entitlements a taboo topic?
Personally, I believe it’s taboo. To deliberately undermine guaranteed pensions would lead to major social unrest. Even when there are rational arguments to have eveyone contribute to a refinancing effort, a move like this would be a severe shock to basic trust in the pension system.

Should government do more to support the third pillar in order to take pressure off the first and second pillars?
Absolutely ! This has to do with personal provisioning. Demograpic developments mean that all social security systems will sooner or later reach a funding ceiling. And this problem can only be solved though people assuming more personal responsibility. This is why the third pillar is so important. People need to be convinced that they have to start early to secure their financial future.

If you could give some advice to the pension funds in Switzereland, what would it be?
First of all, they should seek to benefit from investment markets that have become attractive again and pursue innovative strategies that make the best of the assets they have under management. Secondly, on the technical side, they should not miss the bus by failing to talk to employees about necessary changes, merely because this communication could be difficult. They should be alert to factors such as the conversion and technical interest rates and, if necessary, to their need for adjustment. If they do this, everything should be fine.

A picture of Ole Wiesinger giving the interview.
Personal Profile
Ole Wiesinger
CEO of the Hirslanden Privat Clinic Group

Born in 1962 in Hamburg, Dr Ole Wiesinger has been CEO of the Hirslanden Private Clinic Group since 2008. Previously, he was director of the Hirslanden clinic in Zurich for four years. Wiesinger is a member of the management committee of Mediclinic International plc, the parent company of the Hirslanden Private Clinic Group. Having secured qualifications in biology and medicine, he later gained a post-diploma in health economics. Wiesinger is married with four children. His per-sonal interests include literature and music.